Top 10 Tips on Screening Your Stocks

1. Invest in what you know. If you are going to forge out into the challenging territory of managing and investing your own portfolio, or if you want to play a more active role in the investing your financial planner already does for you, focus on what you know.

If you come from the electronics industry, you have a sense for the proclamations and forecasts of businesses within that industry, and which ones may have the most innovative new technology launching. In this regard, you are more savvy than the financial agent, who may look across the entire market for stocks to meet your financial goal.

2. Get advice for that which you don't know. Just as you may have expert market knowledge in one area, a financial background can predict what a company in trouble or merging, or selling stock is about to do and why. As they say, there's always more to the story than what meets the eye. Any publicly traded company is going to attempt to put its best foot forward in public communication about performance projections.

3. Check the company history. Look at their current performance based on historical trends. Some industries have 3 and 5 year cycles of increase and decline and can be quite predictable. If you enter those cycles at the appropriate time, you can capitalize on the upswing and 'ride the wave.' Conversely, you can also know when to avoid the decline.

4. Look at the current leadership within the company. Has it changed recently? Is the new leader a short-term hatchet man, brought in to downsize the company, or a visionary, setting up some remarkable growth. Do a little background checking on the leadership's performance prior to this company.

5. How is the company doing legally? Have they had recent issues with the SEC or any other body governing business, commerce, or the stock market? You don't want to tie your money up into a company that will suddenly have assets frozen, or reveal a huge business management scam as has been witnessed in recent times.

6. How much stock is the company offering? Sometimes, in an effort to raise money, companies will issue more stock. Depending on the methods they use to do this, it can harm value of the current stock.

7. Are there any talks of mergers or hostile takeovers? Stock values defy all prediction when a company is in the midst of a power struggle. Sometimes, if the hostile entity is extremely large, stock values may soar. If the entity is a relative equal, the market gets suspicious and values may decrease. It can be a big winner...or a big loser.

8. Listen to industry leaders. If you're going to try and invest in a particular market sector, look at what the industry's leaders are doing. What may be a hot seller today, may be obsolete tomorrow. Somebody building a better fax capability is definitely not on the cutting edge.

9. Evaluate risk and what you're willing to lose. A great financial investor friend of mine said, "Never invest anything you can't afford to lose." There are no guarantees. If a stock is high potential, and most likely, high risk, know that going in and plan your investment accordingly.

10. Watch out for stock tips from unsubstantiated sources. I get 2-3 'tips' every day, and some quote of past performance (usually the last 6 months) If the dot.com bust taught us nothing else, it taught us to look beyond tomorrow, and farther back than yesterday. A company's business strategy should have enough sense to it, that even a lay person can recognize the soundness of it.